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What is Blockchain & How Can It Benefit Small Businesses?

Blockchain technology is on the cusp of a revolution. In 2019, it’s likely that this technology will evolve from a complex system for creating bitcoins to a technology framework that underpins entire business ecosystems.

The blockchain technology market is predicted to grow to $2.3 billion by 2021. In addition, according to a recent IBM survey, 65% of major global banks will use blockchain technology within the next three years.

Millions of bits of data are stored on public blockchains already and now its potential value is poised to disrupt the way businesses and SMEs work forever.

What is blockchain?

A blockchain is a reliable, difficult-to-hack record of transactions – and of who owns what. Blockchain is based on distributed ledger technology, which securely records information across a peer-to-peer network. Blockchain ledgers can include land titles, loans, identities, logistics manifests and almost anything else of value.

A blockchain records data across a peer-to-peer network. Every participant can see the data and verify or reject it. Approved data is entered into the ledger as a collection of “blocks” and stored in a chronological “chain” that cannot be altered.

On social media, blockchain is synonymous with cryptocurrency and cybercrime. Last year saw a huge wave of high-profile ransomware attacks against institutions all over the world.

But don’t let these headlines scare you. The technology behind cryptocurrencies and its ability to harness vast amounts of data will make complex data processes faster and more transparent.

5 benefits of blockchain

Imagine a supply chain for a small business: You run a local restaurant and you source your vegetables from a wholesaler. That wholesaler sources their vegetables from farms all over the country and there’s a network of transportation involved between the farm and your restaurant.

Supply chain logistics are notorious for being complex and have lots of literal moving parts. Using blockchain, everyone can see every step of the supply chain and its status safely and securely.

With every transaction, the chain is entered and verified without any disruption or interruption. Being recorded every step of the way, the chain of ownership can never be altered or changed, so you always know where the buck stops when your vegetables don’t turn up on time.

Ultimately, this will allow wholesalers to optimise their supply infrastructures, which will ultimately allow them to provide a better service to small businesses.

And this is just one example! There are many other benefits to blockchain for small businesses, including:

1. Fewer intermediaries

Blockchain is a true peer-to-peer network that will reduce reliance on some types of third-party intermediaries – like banks, lawyers, and brokers.

2. Automation

Blockchain is programmable – which will make it possible to automatically trigger actions, events, and payments once conditions are met.

3. Transparency

Information in blockchain is viewable by all stakeholders and cannot be altered. This reduces risk and creates trust for small businesses who are handling sensitive data.

4. Faster processes

Blockchain can speed up process execution in multi-party scenarios, which allows for faster transactions that aren’t limited by office hours.

5. Security

The distributed and encrypted nature of blockchain means it will be difficult to hack. This shows promise for business and IOT security, as every link in the chain is secure and cannot be tampered with.

Blockchain technology is on the rise in both big businesses and start-ups. As this technology gains traction and mainstream acceptance, the big data applications it supports will become more accessible. If you want a competitive advantage in your industry in 2019, apply blockchain technology to your business’s data strategy.

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